Cash Basis IPSAS now being revised

At its meeting, earlier in September, the IPSAS Board agreed to greatly simplify the Cash Basis IPSAS.  The requirements for consolidation, third party payments and aid are to be made advisory, rather than mandatory (as is the case at present).  

An exposure draft (ED) is to be developed and presented at the next meeting of the IPSAS Board in December.  It is then hoped that a revised Cash Basis IPSAS can be agreed at its later meeting in March 2016.

More details of the proposed changes are available from:  http://www.ipsasb.org/system/files/meetings/files/Agenda_item_2_combined-v1.pdf

These changes will be welcomed by all who want to see greater openness and accountability.  It is a significant problem that over 12 years after it was first issued the Cash Basis IPSAS has yet to be properly implemented by a single government.  This is because the Standard does not reflect existing good practice - not a single government in the world, for example, actually issues fully consolidated financial statements.  So more work and research is needed to identify good practices which can then be codified by further amendments to the Standard.

However, the move to accrual accounting still provides an expensive and unrealistic goal.  All the objective and authoritative research shows that this is costly and does not actually deliver the expected benefits, see:  http://www.icgfm.org/journal/2012/no1/chapter5.pdf              

Thus the Cash Basis IPSAS should not be seen as a first step towards accrual accounting, the cash basis is an end in itself and is still used by at least 90% of governments in the world and most of those responsible for the top 20 economies.